Economy - - Oct 09,2018
Asian shares drop 17-month lows as recorded on Tuesday since China permitted its currency to slip amid severe losses in domestic share markets.
The reasons for this major hit to Asian shares are focused at everything ranging from trade wars, the Chinese economy, higher US bond yields and even political turmoil in Europe. The investors are majorly concerned with the outcome of these events in the near future.
According to a note issued by analysts at JPMorgan, "Risk sentiment is in a foul mood and stocks are sinking everywhere". The note further mentioned that Chinese economic momentum is continuing to deteriorate alongside growing pressure from the United States, currency fall is the noticeable release valve.
On Tuesday, China's central bank fixed its yuan at 6.9019 per dollar, thereby breaching the 6.9000 barrier and further leading speculators to drive the dollar to 6.9320 in the spot market.
This significant dip in the Chinese currency might offer a positive impact on exporters. Also, it was observed that Shanghai blue chips temporarily rise by 0.1 percent in early trade.
The disappointment rests in the fact that, yuan had slipped to its lowest official close in comparison to US dollar in the past seven weeks.
A senior US Treasury official on Monday stated concern regarding the decline in the yuan. He added that it was uncertain whether Steven Mnuchin, Treasury Secretary, would fix a meeting with any of the Chinese representatives this week.